Supply Chain & Procurement worked example

Inventory Carrying Cost at 92% annual carrying rate: a worked example

Push annual carrying rate up to 92% and the picture changes. This example computes every intermediate figure at that operating point. Use it when inventory carrying cost in supply chain and procurement is being put through a supply chain and procurement weighted-cost review.

The inputs for this scenario

  • Average units on hand: 100 units (unchanged)
  • Value per unit: 45 $ / unit (unchanged)
  • Annual carrying rate: 92 % (raised for this scenario; the documented default is 80)
  • Fixed storage / handling cost: 250 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Weighted cost = quantity × rate × capture factor + fixed adjustment) to the inputs above produces each figure below.
  • At this operating point the engine returns 4,390 $ for total inventory carrying cost, the number this scenario is built around.
  • At this operating point the engine returns 43.9 $ / piece for inventory carrying cost per unit.
  • At this operating point the engine returns 4,140 $ for variable inventory carrying cost.
  • At this operating point the engine returns 250 $ for fixed inventory carrying cost adder.

How this compares with the baseline

  • Against the tool's baseline example, where annual carrying rate sits at 80% and the headline result is 3,850 $, this scenario comes in 14.03% above the baseline at 4,390 $.
  • It multiplies inventory quantity by unit value, applies a carrying-cost capture rate as a percentage, and adds a fixed adjustment to give total carrying cost and cost per unit. The value of this scenario is the size of the gap it exposes: that gap, priced out over a year, is the budget you can justify spending to close it.

Results at a glance

  • Total inventory carrying cost: 4,390 $ (headline result)
  • Inventory carrying cost per unit: 43.9 $ / piece
  • Variable inventory carrying cost: 4,140 $
  • Fixed inventory carrying cost adder: 250 $

Run it with your numbers

  • Every input above is editable in the live Inventory Carrying Cost calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.